DBS Q1 profit up 9% to $1.21b

Strong interest income offset declining wealth management, brokerage and investment banking fees.

DBS profits rose 9% YoY to $1.21b (S$1.65b) in Q1 as strong interest income more than cushioned the impact of declining earnings from wealth management, brokerage and investment banking, the bank said in its financial statement. On a quarter-on-quarter basis, profits surged 25%.

Net interest income rose 9% to $1.70b (S$2.31b) with loans growing 5% to $255b (S$347b). The loan growth was driven by non-trade corporate loans and consumer loans which rose 11% and 3% respectively to offset an 11% decline in trade loans. Net interest margin, a common measure of profitability, also expanded 5bp to 1.88% amidst higher rates in Singapore and Hong Kong.

On the other hand, net fee income fell 2% to $536.43m (S$730m) as wealth management, brokerage and investment banking fee income declined 12% in aggregate which DBS attributes to a high year ago base. Card fees increased 21% to $138.88m (S$189m) from higher customer transactions across the region. Transaction service fees and loan-related fees rose to $138.15m S$188m) and $79.36m (S$108m), respectively.

Other non-interest income rose 5% to $375.50m (S$511m) as increases in trading income and net gain on investment securities more than offset a property gain of $63.20m (S$86m) a year ago. Trading income rose 20% to $325.53m (S$443m) from gains in interest rate and credit activities. Net gain on investment securities also doubled to $38.95 (S$53m) from a low year-ago base.

Asset quality continued to be benign with non-performing assets (NPA) remaining stable from the previous quarter at $4.12b (S$5.6b) as new non-performing asset formation remained low. The bad loan ratio also held steady at 1.5%. Total allowances fell to $55.85m (S$76m), half the level a year ago and two-fifths the previous quarter.

Deposits were stable from the previous quarter and rose 5% from a year ago to $290.26b (S$395b). The liquidity coverage ratio of 137% and the net stable funding ratio of 111% were both above the regulatory requirement of 100%. Similarly, the Common Equity Tier-1 ratio rose 0.2 percentage points from the previous quarter to 14.1% as earnings accretion outpaced risk-weighted asset growth.

The bank declared a dividend payout of 30 cents per share and that dividends will be paid four times a year instead of twice annually.